Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd

[2009] NSWLEC 165

Reported Decision: (2009) 170 LGERA 22
[2010] ALMD 216

Land and Environment Court

of New South Wales

CITATION:	Caroona Coal Action Group Inc v Coal Mines Australia Pty Limited and Minister for Mineral Resources [2009] NSWLEC 165
PARTIES:	APPLICANT Caroona Coal Action Group Inc FIRST RESPONDENT Coal Mines Australia Pty Limited SECOND RESPONDENT Minister for Mineral Resources
FILE NUMBER(S):	80003 of 2009
CORAM:	Preston CJ
KEY ISSUES:	PRACTICE AND PROCEDURE :- maximum costs order - source, nature and purpose of power - whether access to justice would be impeded if maximum costs order not made - Uniform Civil Procedure Rules 2005 Pt 42 r 42.4
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Mining Act 1992 (NSW) Mining Amendment Act 2008 (NSW) Mining Regulation 2003 (NSW)
CASES CITED:	Alliance to Save Hinchinbrook Inc v Cook & Ors [2005] QSC 355 Blue Mountains Conservation Society Inc v Delta Electricity [2009] NSWLEC 150 Campbell’s Cash and Carry Pty Limited v Fostif Pty Ltd (2006) 229 CLR 386 Corcoran v Virgin Blue Airlines Pty Ltd [2008] CCA 864 Minister for Planning v Walker (No 2), [2008] NSWCA 334 Nettheim v Minister for Planning and Local Government (No 2) (unreported, NSWLEC, Cripps CJ, 28 September 1988) Oshlack v Richmond River Shire Council (1994) 82 LGERA 236 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 R (On the Application of Buglife: The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corp [2008] EWCA Civ 1209; [2009] Env LR 18; [2009] JPL 1045 R (On the Application of Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192; [2005] 1 WLR 2600; [2005] 4 All ER 1 Sacks v Permanent Trustee Aust Ltd (1993) 45 FCR 509 Sherborne Estate (No 2): Vanvalen & Anor v Neaves & Anor; Gilroy v Neaves & Anor [2005] NSWSC 1003; (2005) 65 NSWLR 268 Woodlands v Permanent Trustee Co Ltd & Ors (1995) 58 FCR 139
DATES OF HEARING:	31 August 2009
DATE OF JUDGMENT:	24 September 2009
LEGAL REPRESENTATIVES:	APPLICANT Ms J Gleeson SOLICITORS Environmental Defender's Office FIRST RESPONDENT Mr R C Beasley SOLICITORS Minter Ellison SECOND RESPONDENT Mr R T Beech-Jones SC and Ms C C Spruce SOLICITORS Crown Solicitor's Office

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Preston CJ

24 September 2009

80003 of 2009

CAROONA COAL ACTION GROUP INC v COAL MINES AUSTRALIA PTY LIMITED AND MINISTER FOR MINERAL RESOURCES

JUDGMENT

1 His Honour: The applicant is an incorporated association formed to contest exploration and mining on land in the Caroona district, on the Liverpool Plains in NSW.

2 Membership of the applicant comprises landholders in the Caroona district whose properties are within the area of an exploration licence granted by the second respondent to the first respondent as well as members of the wider community.

3 The applicant has brought proceedings, by way of judicial review, challenging the validity of the exploration licence, EL6505, and an earlier coal authorisation 216. These authorities enable the first respondent to undertake exploration activities in the Caroona district.

4 The applicant has applied, ultimately by an Amended Notice of Motion filed in Court on 31 August 2009, for an order specifying the maximum costs that any party may recover from any other party. The Amended Notice of Motion specified the maximum amount to be $34,000. This would mean that if the applicant were to be unsuccessful in the proceedings, and an adverse cost order were made against it, its liability would be capped at $34,000. However, if the applicant were to be successful in the proceedings, and were the beneficiary of a favourable costs order, it would also be limited to being able to recover from the respondents a maximum amount of $34,000.

5 The first and second respondents opposed the Court making a maximum costs order in this case.

The power to make a maximum costs order

The source of the power

6 The power to specify, in advance, the maximum costs that a party may recover from another party if a costs order is subsequently made in the party’s favour is given by Pt 42 r 42.4 of the Uniform Civil Procedure Rules 2005.

7 The general power to order costs under s 98 of the Civil Procedure Act 2005 cannot be used to make a maximum costs order in advance of the conclusion of the whole proceedings or a discrete part or interlocutory stage of the proceedings, although it can be used afterwards to specify a gross sum that a party may recover from another party: see s 98(4)(c) of the Civil Procedure Act 2005. In Sherborne Estate (No 2): Vanvalen & Anor v Neaves & Anor; Gilroy v Neaves & Anor [2005] NSWSC 1003; (2005) 65 NSWLR 268 at [33], Palmer J noted:

“As the opening words of s 98(4) indicate, the Court acts under this section at the time of pronouncing a costs order, whether at the conclusion of the whole of the proceedings or at the conclusion of some interlocutory stage. In this regard, the power of the Court is exercised at a different time and for a different purpose from the power conferred by the Uniform Civil Procedure Rules , r 42.4: it is exercised as part of the giving or refusal of substantive relief whereas the power in the Uniform Civil Procedure Rules , r 42.4, is exercised as part of case management to ensure that disputes are resolved justly and cheaply.”

8 Part 42 r 42.4 provides:

42.4 Power to order maximum costs

(1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another.

(2) A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party:

(a) has failed to comply with an order or with any of these rules, or
(b) has sought leave to amend its pleadings or particulars, or
(c) has sought an extension of time for complying with an order or with any of these rules, or
(d) has otherwise caused another party to incur costs that were not necessary for the just, quick and cheap:
(i) progress of the proceedings to trial or hearing, or
(ii) trial or hearing of the proceedings.
(3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap:
(a) progress of the proceedings to trial or hearing, or
(b) trial or hearing of the proceedings.
(4) If, in the court’s opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1).”

9 The following points may be noted about the power to make a maximum costs order.

The court may act of its own motion or on a party’s application

10 First, the court may make a costs order either of its own motion or on the application of a party. The ability of the court to make an order of its motion reveals that the purpose of a maximum costs order is not merely restricted to protecting a party from the consequences of an adverse costs order. The purpose also extends to the court implementing the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in the proceedings (see s 56 of the Civil Procedure Act 2005), acting in accordance with the dictates of justice (see s 58 of the Civil Procedure Act 2005) and ensuring that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute (see s 60 of the Civil Procedure Act 2005).

The power to make a maximum costs order is discretionary

11 Secondly, the power of the court to make a maximum costs order is discretionary. The discretion is to be exercised judicially. The exercise of the discretionary power must have a proper factual foundation, must be explicable according to legal principle and accord with the dictates of procedural fairness. The court must also seek when exercising the discretionary power to give effect to the overriding purpose (see s 56(2)), the dictates of justice (see s 58) and proportionality of costs (see s 60).

The maximum costs order may operate in different directions

12 Thirdly, a maximum costs order may be unidirectional, bidirectional or multidirectional. That is to say, the court may specify any one or more of the parties as being protected by a maximum costs order. A unidirectional order would be where the court specifies that only one party is protected by a maximum costs order, most commonly the applicant in the substantive proceedings. The consequence would be that the respondent, if a costs order subsequently were to be made by the court in its favour, would only be able to recover costs from the applicant up to the maximum amount specified in the order. Such an order is unidirectional, in that it only operates to cap costs in one direction, capping the costs the respondent can claim from the applicant. The cap does not operate in the other direction. Hence, if a costs order is made in favour of the party who is protected by a maximum costs order, such as the applicant, that party can still recover costs from the other party or parties without limitation by the maximum costs order.

13 The court may also make a maximum costs order that is bidirectional (where there are only two parties) or multidirectional (where there are more than two parties). This is where the cap on the costs operates on both or all of the parties. Each party may only recover from any other party costs up to the maximum amount specified in the order. Hence, just as the respondent may only recover from the applicant costs up to the maximum amount specified in the order if the respondent were to be successful in the proceedings and was awarded costs, so too the applicant may only recover from the respondent costs up to the maximum amount specified if the applicant were to be successful and was awarded costs. The cap operates in both directions.

Certain costs are excluded from a maximum costs order

14 Fourthly, the maximum amount that may be specified in a maximum costs order excludes costs that may be ordered against the party in the future relating to certain types of conduct by that other party, such as conduct in breach of court orders or rules, or that causes another party to incur unnecessary costs, or that is the price for obtaining leave of the court to amend proceedings or particulars or for an extension of time for complying with court orders or rules (see r 42.4(2)(a)-(d)). A party is, therefore, not protected by a maximum costs order from having to pay the costs of another party in relation to such conduct or for such leave of the court. This ensures that there remains a cost incentive on parties to comply with the overriding purpose of ensuring the just, quick and cheap resolution of the real issues in the proceedings.

Court directions may mitigate prejudice caused by making an order

15 Fifthly, the court may ensure the just, quick and cheap resolution of the real issues in the proceedings, and mitigate prejudice that might be suffered by a party restricted by a maximum costs order, by making appropriate directions governing the preparation for, and conduct of, the hearing. These directions may include those specified in ss 61 and 62 of the Civil Procedure Act 2005.

Purpose of maximum costs order is to facilitate access to justice

16 Sixthly, the purpose of a maximum costs order is to facilitate access to justice. Access to justice is impeded where the cost of litigation is high. The cost of litigation may include not only a party’s own legal costs but also the other party’s legal costs if an adverse costs order is made. A party may be inhibited in accessing justice where its own legal costs will be high but also where it fears an order that it pay high legal costs of the other parties.

17 In relation to a party’s own legal costs, access to justice is impeded where there is disproportionality between the cost of litigation and the importance and complexity of the subject matter of the dispute. Disproportionality not only inhibits access to justice in the particular proceedings but may also impede access to justice in other disputes between other parties. If disproportionality of costs becomes commonplace in the justice system, parties will be deterred from submitting their disputes for resolution to the courts. Absent other fora for resolving the disputes, justice will remain unmet.

18 A maximum costs order is one means of achieving proportionality of costs. It is most commonly employed where the subject matter of the dispute is simple or of lower value. Family provision proceedings are a good example. The deceased’s estate may not be large in value and unchecked litigation by family members seeking provision or better provision out of the estate may result in the costs of the litigation outweighing the value of the estate with the consequence that there may be insufficient funds available to make adequate provision for family members. A maximum costs order is one means of endeavouring to prevent, or at least mitigate, this unjust outcome.

19 In Sherborne Estate (No 2): Vanvalen v Neaves at [26], [29] and [30], Palmer J noted this benefit of a maximum costs order in family provision proceedings:

“26 I conclude that the Uniform Civil Procedure Rules , r 42.4 , is intended as a means whereby the Court may, if the need arises, curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs by making it clear, at an early stage of the proceedings, that beyond a certain limit the parties will have to bear their own costs — win or lose.

29 It seems to me that the Uniform Civil Procedure Rules , r 42.4 , and its precursor, Supreme Court Rules , Pt 52A, r 35A , were designed to put into the Court's hands a brake on intemperate and disproportionately expensive conduct of proceedings. The power conferred by the Rule is not brought into play only if one of the parties invokes it: the Court itself may exercise the power on its own motion whenever it sees the need. This is because the policy of the law, enshrined in the Civil Procedure Act , s 56(1) , is to facilitate the just, quick and cheap resolution of the real issues in proceedings. By s 56(2), the Court not only may, but must, give effect to that policy whenever it exercises any power conferred upon it by the Act or the Rules — indeed, even when the parties themselves do not wish to conduct the proceedings quickly or cheaply.
30 Proportionality of costs to the value of the result is central to the just and efficient conduct of civil proceedings: see, for example, Lownds v Home Office (Practice Note) [2002] 1 WLR 2450; [2002] 4 All ER 775, per Lord Wolfe CJ. It is a pity that the precursor of the Uniform Civil Procedure Rules , r 42.4 , seems never to have been used to this end. In Jvancich v Kennedy (No 2) [2004] NSWCA 397 at [6], the Court of Appeal pointed out that it has not been the practice in Australia for the Court to fix the amount of costs. However, the Court in that case was concerned with a costs order made at the conclusion of proceedings and was not giving consideration to the making of a capping order in the course of case management under the Supreme Court Rules , Pt 52A, r 35A ( Uniform Civil Procedure Rules , r 42.4 ). I do not read Jvancich as inhibiting the use to which I have suggested Uniform Civil Procedure Rules , r 42.4 may be put. In my opinion the Court should not be reluctant to use Uniform Civil Procedure Rules , r 42.4 to prevent extravagant expenditure of legal costs in Family Provision Act cases, such as has occurred here. The time for its use is early in case management, whenever it appears that the parties' litigious fervour may be leading them to excessive expenditure of costs.”

20 The court acts in this situation to fulfil the duty placed upon it to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the issues in the proceedings (see s 56(2) of the Civil Procedure Act 2005). The need to fulfil this duty exists regardless of the parties’ desires.

21 Ensuring proportionality of costs does not always have the effect of achieving access to justice. The subject matter of a dispute may be important, complex and of high value. By the criterion of proportionality of costs alone, significant expenditure of legal costs to litigate such a dispute could be justified. Yet the financial resources of one or more of the parties may be insufficient to meet an adverse costs order of such magnitude. The fear of exposure to significant legal costs to which an unsuccessful party may be subjected may deter a party from asserting, or continuing to assert, its rights in litigation. Access to the courts is thereby placed beyond the party’s reach and it is denied access to justice (see Sacks v Permanent Trustee Aust Ltd (1993) 45 FCR 509 at 511 and Woodlands v Permanent Trustee Co Ltd & Ors (1995) 58 FCR 139 at 148). A maximum costs order may alleviate this barrier by protecting the beneficiary of the order from exposure to legal costs beyond the maximum amount specified in the order.

22 A maximum costs order can have a protective purpose in another way. Unchecked litigation, particularly by a party with access to significant financial resources to fund litigation or, conversely, by a party with limited financial resources and little fear of the financial consequences of an adverse costs order, can impose an unjust burden on other parties. A maximum costs order may curb the tendency of one or all parties to engage in excessive expenditure of legal costs by making it clear, at an early stage of the proceedings, that beyond a certain limit the parties will have to bear their own costs, win or lose. The court may also make a maximum costs order on terms, giving directions necessary to effect the just, quick and cheap progress of the proceedings to hearing or the just, quick and cheap hearing of the proceedings (see r 42.4(3)). Such directions may also mitigate the potential for excessive expenditure on legal costs.

23 A category of litigation where the fear of an adverse cost order may impede access to justice is public interest litigation. Back in 1989, Toohey J, speaking extra-curially, noted the inhibiting effect of a potential adverse costs order on public interest litigation:

“There is little point in opening the doors to the courts if litigants cannot afford to come in. The general rule in litigation that ‘costs follow the event’ is in point. The fear, if unsuccessful, of having to pay the costs of the other side (often a government instrumentality or wealthy private corporation), with devastating consequences to the individual or environmental group bringing the action, must inhibit the taking of cases to court. In any event, it will be a factor that looms large in any consideration to initiate litigation”: J Toohey and A D’Arcy, “Environmental Law – Its Place in the System” in R J Fowler (ed), Proceedings of the International Conference on Environmental Law. 14-18 June 1989, Sydney, Australia (organised by the National Environmental Law Association of Australia and the Law Association for Asia and the Pacific).

24 This passage has been cited with approval by courts in Australia and overseas: see, for example, Oshlack v Richmond River Shire Council (1994) 82 LGERA 236 at 238 per Stein J whose decision was upheld by a majority in the High Court of Australia in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, the remarks being also noted at [114] by Kirby J, and R (On the Application of Corner House Research) v Secretary of State for Trade and Industry [2005] EWCA Civ 192; [2005] 1 WLR 2600; [2005] 4 All ER 1 at [31] by the UK Court of Appeal.

25 The legal costs in public litigation may be significant, reflecting the fact that the subject matter of the litigation may be important, complex and of high value. There can be considerable disparity in the financial resources of a public interest plaintiff and the governmental or corporate defendants. The making of a maximum costs order may enable the public interest litigation to continue, but conversely, if a maximum costs order were not to be made, the public interest plaintiff may discontinue the proceedings.

26 Public interest litigation cases in which a form of a maximum costs order has been made include: Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864; R (On the Application of Corner House Research) v Secretary of State for Trade and Industry; R (On the Application of Buglife: The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corp [2008] EWCA Civ 1209; [2009] Env LR 18; [2009] JPL 1045; and Blue Mountains Conservation Society Inc v Delta Electricity [2009] NSWLEC 150.

27 However, it is important not to over-generalise; not all public interest litigation will be discontinued if a court declines to make a maximum costs order. Although the archetypical public interest litigant is seen to be a person of limited financial resources, this is not always so. It may be that the plaintiff has, or has access to, financial resources sufficient to fund the public interest litigation. There may be an overlap of the public interest with private interests. The public interest and private interests are not mutually exclusive categories. Litigation can still properly be characterised as being in the public interest, notwithstanding it also may advance private interests (see Nettheim v Minister for Planning and Local Government (No 2) (unreported, NSWLEC, Cripps CJ, 28 September 1988) pp 3-5, and Alliance to Save Hinchinbrook Inc v Cook & Ors [2005] QSC 355 at [11]). Where public and private interests overlap, the plaintiff may be able to access financial resources from private interests. Public interest litigation may also be able to be funded by lawyers and experts acting on a contingency basis, such as a “no win, no fee” basis. Litigation funders may also be prepared to fund public interest litigation (see Campbell’s Cash and Carry Pty Limited v Fostif Pty Ltd (2006) 229 CLR 386 for an example of proceedings funded by litigation funders). As a consequence of these different means of financial support, certain public interest litigation may well be able to continue, regardless of whether a maximum costs order is made.

28 There is also a risk of overgeneralising the beneficial effect the making of the maximum costs order may have on facilitating access to justice. Whilst in many, perhaps most, public interest litigation, the fear of an adverse costs order may be an important inhibiting factor, in other cases a maximum costs order can itself act as a disincentive to public interest litigation. Commonly, if a court determines that it ought to make a maximum costs order, the court considers that fairness dictates that the costs cap should be bidirectional or multidirectional, so that the plaintiff not only has its liability to pay an adverse costs order capped but it also has its entitlement to recover under a favourable costs order capped. Furthermore, in determining the amount of the costs cap, the court may limit the extent and nature of the legal representation the public interest plaintiff who is the beneficiary of a maximum costs order can have to only modest representation, such as a solicitor and/or a single advocate of junior counsel. Examples of maximum costs orders with such restrictions on the public interest plaintiff are: R (On the Application of Corner House Research) v Secretary of State for Trade and Industry at [76], [147]; R (On the Application of Buglife: The Invertebrate Conservation Trust v Thurrock Thames Gateway Development Corp at [21]-[25], [45]; and Blue Mountains Conservation Society Inc v Delta Electricity [2009] NSWLEC 150 at [71].

29 Such restrictive maximum costs orders may in fact inhibit access to justice for public interest litigants. In the United Kingdom, a Report from the Working Group on Access to Environmental Justice, Ensuring access to environmental justice in England and Wales, published on 9 May 2008, considered the stifling effect that protective costs orders, capping costs at “modest” levels and imposing limitations on legal representation, were having on public interest litigation. In Appendix 3 (pp 40-41), the Report noted:

"4. As a consequence, caps on claimant costs are being set at levels that (in general even if not necessarily in each particular case) are unsustainable and as a result stifle litigation. If unrealistic caps are set on claimants’ costs, lawyers who specialise in such cases will not be able to continue to work in this field. The impact of this requirement therefore threatens to undermine the contribution PCOs can make to access to justice generally and, if applied to environmental cases, to Aarhus compliance.
5. The Court of Appeal approach in Corner House, which limits capped costs to cover junior counsel only, also causes difficulties. By their very nature, complexity and public importance, a significant number of cases worthy of a PCO will justify the instruction of leading counsel. Indeed, there will frequently be leading counsel instructed for the defendant (as well as the developer or other interested third party) and in such cases their automatic exclusion for claimants would result in substantial inequality of arms.
6. There is a fundamental difference in the ways in which the burdens of costs caps fall on the claimant and defendant. The PCO limiting the defendant's costs recovery is paid for by the defendant public body itself (in the same way as if the claimant were legally aided). There is no impact on the fees paid to the defendant's lawyers. Any cap on the claimant's costs is almost inevitably paid for by reducing the fees recovered by the claimant's lawyers. In effect, claimants’ lawyers are bearing the burden of subsidising the provision of access to justice for their clients."

30 As the Report notes, therefore, maximum costs orders that take the form of imposing bidirectional or multidirectional capping orders and requiring only modest legal representation, may disadvantage a public interest litigant. The public interest litigant may be deprived of access to lawyers and experts that might otherwise have been prepared to act on a contingency basis (the incentive for the lawyers and experts being that they would recover their full professional fees and not be restricted to only a modest proportion). Restricting the nature and extent of legal representation may also deprive the public interest litigant of the benefit of experienced and able senior counsel and give rise to an unjust disparity in the quality of legal representation between the plaintiff (who is restricted in its legal representation) and the defendants (who are unrestricted in their legal representation). The public interest litigant may also be deprived of funds that might otherwise have been provided by a litigation funder (the incentive for the litigation funder again being recovery of full fees and usually some proportion of any monetary judgment sum). The public interest litigant who is ultimately successful in the proceedings also suffers because the costs cap may prevent full recovery of legal costs, causing either the public interest litigant or their lawyers and experts to subsidise access to justice. For non-governmental organisations, lawyers and experts, who act in the public interest, such subsidisation is not sustainable.

Factors relevant to making a maximum costs order

31 Seventhly, the factors relevant to the exercise of the discretion to make a maximum costs order will vary depending on the circumstances of the case and of the plaintiff and what is necessary to facilitate access to justice in that case. The factors that may be relevant to cases in which the issues might be simple or the matter in dispute of lower value, where disproportionality of costs is the critical concern, will differ or have different weight to the factors that may be relevant to large litigation, including much public interest litigation, where the stakes are high given the importance and complexity of the matters in dispute, where the critical concern is ensuring access to justice and the potential stultifying effect of the fear of an adverse costs order.

32 In the case of public interest litigation, courts in Australia and overseas have formulated various factors to be considered. In Corcoran v Virgin Blue Airlines Pty Ltd, Bennett J suggested that relevant factors include: the timing of the application; the complexity of the factual or legal issues raised in the proceedings; the amount of damages that the applicant seeks to recover and the extent of any other remedies sought; whether the applicant’s claims are arguable and not frivolous or vexatious; the undesirability of forcing the applicant to abandon the proceedings; and whether there is a public interest element to the case (at [6]).

33 In R (On the Application of Corner House Research) v Secretary of State for Trade and Industry at [74], the UK Court of Appeal stated the following five principles:

“We would therefore restate the governing principles in these terms.
(1) A protective costs order may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that: (i) the issues raised are of general public importance; (ii) the public interest requires that those issues should be resolved; (iii) the applicant has no private interest in the outcome of the case; (iv) having regard to the financial resources of the applicant and respondent(s) and to the amount of costs that are likely to be involved, it is fair and just to make the order; and (v) if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.
(2) If those acting for the applicant are doing so pro bono this will be likely to enhance the merits of the application for a PCO.
(3) It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above.”

34 In R (On the Application of Buglife: The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corp, the UK Court of Appeal further analysed these principles (at [13]-[28]).

35 In Blue Mountains Conservation Society Inc v Delta Electricity, Pain J (at [55]) referred to the various factors in Corcoran v Virgin Blue Airlines Pty Ltd and R (On the Application of Corner House Research) v Secretary of State for Trade and Industry, and considered the following factors: the timing of the application; whether the claim appears arguable; whether proceedings are characterised as public interest litigation; whether the plaintiff has a private interest in the proceedings; whether the proceedings will continue if an order is not made; whether the plaintiff’s counsel is acting pro bono; the parties’ financial means; and whether an order would reward inefficient litigation (at [56]-[68]).

36 These factors may, in appropriate cases, provide guidance but they should not be elevated to become fixed criteria governing the exercise of the discretionary power to make a maximum costs order. All of the factors will not be relevant in all of the cases. Some factors may take on different importance depending on the circumstances. For example, the complexity or simplicity of the factual or legal issues may take on different significance depending on the nature and subject matter of the proceedings and the aspect of access to justice that is relevant, such as achieving proportionality of costs or alleviating the deterrent effect of the fear of an adverse costs order. Some of the factors have the potential for misdirecting the court from considering the critical issue of access to justice. Examples are whether there is any private interest in the proceedings or whether the plaintiff’s counsel is acting pro bono. In the end, the critical question for the court is whether or not making a maximum costs order facilitates or impedes access to justice in the particular case.

The parties’ submissions as to relevant factors in this case

37 The primary basis on which the applicant submits that the Court should make a maximum costs order is “the public interest nature of the proceedings”. In determining whether the proceedings can be said to be brought in the public interest, the applicant refers to the principles summarised by the Court of Appeal in Minister for Planning v Walker (No 2) [2008] NSWCA 334 when exercising the costs discretion at the conclusion of the proceedings. These are:

(a) the public interest served by the litigation;
(b) whether the interest is confined to a relatively small number of people in the immediate vicinity of a development, or whether the interest is wide;
(c) whether the applicant sought to enforce public law obligations;
(d) whether the prime motivation of the litigation is to uphold the public interest and the rule of law; and
(e) whether the applicant has no pecuniary interest in the outcome of the proceedings (at [6]).

38 As to the first factor, the applicant submits:

“16 The public interest served by the litigation is the protection of the environment of the Liverpool Plains and, in particular, the region’s prime agricultural land and natural waterways: see the affidavit of Timothy Duddy.

17 The groundwater aquifers and surface water flows in the area covered by EL6505 provide stock, domestic, irrigation and town water supplies for Caroona and neighbouring towns including Quirindi, Gunnedah, Spring Ridge, Curlewis and Walhallow Aboriginal Community. The area forms part of the Namoi Valley catchment. Water from this region forms part of the head waters of the Murray-Darling Basin.

18 The climate, soils and unique groundwater on the Liverpool Plains makes the Plains one of the most fertile and drought-resistant agricultural areas in Australia. The Applicants want to ensure that the unique environmental attributes of the area that are the reason it is so productive, are not damaged by coal mining.”

39 As to the second factor, the applicant submits that there is a wide public interest in the subject matter of the proceedings:

“19 Interest in the subject matter of the proceedings extends beyond the membership of the Applicant to include the local community of Caroona and the broader community … A rally organised by the Applicant in September 2008 attracted about 300 people. In May 2009, the Senate Select Committee on Agricultural and Related Industries toured the farmland on the Liverpool Plains and held hearings at Gunnedah on the issue of food security and mining on the Liverpool Plains. The broader issues associated with allowing exploration activities within the area occupied by EL6505 and activities of the Applicant has already attracted a relatively significant amount of local and regional media interest. Examples of media interest are discussed at paragraph 32 of the affidavit of Timothy Duddy.”

40 As to the third and fourth factors, the applicant submits that the proceedings seek judicial review in relation to the process by which the first respondent obtained EL6505. The issues include whether the Minister complied with s 237 of the Mining Act 1992 in connection with EL6505. The applicant submits the proceedings will be in the nature of a test case and will provide future guidance in interpreting and applying the statutory provisions the subject of the proceedings:

“21 The proceedings will test provisions within the Mining Act 1992 relating to the grant and transfer of exploration licences that have not yet been the subject of judicial consideration. All rights to minerals in NSW vest in the Crown and the Minister for Mineral Resources controls the right to explore for these minerals. The judgment in these proceedings therefore has the potential to clarify the Minister’s powers and obligations when granting and transferring mineral authorities and thereby have an application beyond the circumstances of this particular case. In recent years, NSW has experienced a surge in exploration licence applications, with close to 500 applications for mineral and petroleum exploration licences being received by the Department of Mineral Resources in 2006-07.”

41 As to the fifth factor, the applicant submits that it is a community group whose aims relate to preventing mining causing harm to the local environment and the community. The applicant, as an association, has no pecuniary interest in the proceedings.

42 Referring to the factors in Corcoran v Virgin Blue Airlines Pty Ltd, the applicant submits:

“23 The following additional factors support the grant of the orders sought:
(a) The application is made at a very early stage in the proceedings, shortly after the Applicant filed and served its Points of Claim. Making the application at this stage will enable the other parties to take into account any limitation on the costs payable to the other parties in the event an order is made.
(b) The proceedings are not factually complex. The proceedings are judicial review of the Minister’s purported grant or transfer of EL6505 to the First Respondent. There are unlikely to be any disputes as to the facts in the proceedings and evidence is likely to be confined to the papers that were before the Minister when he purportedly granted or transferred EL6505, as well as mineral title documents relating to EL6505 and Coal Authorisation 216, which will be submitted in a Joint Tender Bundle. Having regard to the limited evidence that will need to be adduced by the parties, it is unlikely that the hearing will be lengthy, or that the preparation of evidence will be costly.
(c) The Applicant has limited financial resources, as detailed at page 64 of the affidavit of Timothy Duddy, such that the Applicant may face difficulty in facing an adverse costs order in the event that it is unsuccessful in the proceedings. [Mr Duddy’s evidence is that the total assets of the applicant are of $79,215.49, but these are offset by total liabilities in the same sum, resulting in net assets of $0.00.] Fear of an adverse costs order should not deter the Applicant from properly putting forward its claims, particularly in proceedings that are brought in the public interest.
(d) The claim is reasonably arguable and not frivolous and vexatious.
(e) The Applicant does not seek damages, and the review sought by the Applicant is confined to declarations and orders arising from the Court’s findings on whether the Minister’s purported grant or transfer of EL6505 was valid.”

43 The first respondent contests that r 42.4 of the Uniform Civil Procedure Rules is the appropriate source of power for the Court to make a maximum costs order having regard to the applicant’s submission that the primary basis upon which it seeks the order is the public interest nature of the proceedings. The first respondent submits that the object of r 42.4 is to ensure proportionality of cost. The first respondent submits:

“4 At stake in these proceedings is the validity of an exploration licence for which, as a matter of public record, the first respondent has paid the State Government close to $100 million. The proceedings have been listed for a four-day hearing to commence on 26 October 2009. Absent something quite startling, issues of proportionality between the costs of these proceedings and the ultimate relief sought by the applicant are unlikely to arise. If necessary however, that issue can only properly be considered and determined by the Court at the conclusion of this hearing, not at this early stage”.

44 Secondly, the first respondent submits that the characterisation of the proceedings as being “public interest” proceedings is not enough by itself to warrant a maximum costs order being made.

45 Thirdly, in so far as the application is based primarily on the proceedings being in the public interest, the first respondent submits that the application is premature. The question of whether the proceedings are in the public interest and, if so, the effect that characterisation should have on the exercise of the costs discretion is best made at the conclusion of the proceedings when the trial judge has had the benefit of having heard the evidence and the arguments in the proceedings and of making findings.

46 Fourthly, the first respondent contests that the proceedings should be characterised as being public interest litigation:

“13 The applicant submits that the ‘public interest served by the litigation is the protection of the environment of the Liverpool Plains’: applicant’s submissions at [16]. There is no dispute that the protection of the environment of the Liverpool Plains is a matter of importance, both to the first respondent and to the community. However, to attempt to label these proceedings as being about the environmental protection of the Liverpool Plains is to potentially ‘distract attention from the legal issue which is at stake’ in the litigation, and from what the case truly concerns.

14 The proceedings before the Court concern the validity or otherwise of an exploration licence. It is important to note that what is involved here is not a mining lease, but an exploration licence. The matters raised at [7] and [8] of the affidavit of Timothy Duddy sworn on 7 August 2009 are undoubtedly the ‘concerns’ of the members of the applicant. The element of interest in this case is however largely the private interest of the landholders who own land within the area of EL6505, and not a truly public interest. Further, there is neither evidence to support those landholder ‘concerns’, nor are they matters that in the main relate to exploration.

15 There is a distinction, not drawn in Mr Duddy’s affidavit, between mining and exploration. Exploration is a process whereby the location of coal is investigated, along with its quality. Hydro-geological investigations are also made to determine the feasibility (if any) of mining. The process however involves ‘minimal impact’. Further, any disturbance is both temporary, and compensable under the Mining Act. A grant of an exploration licence is not a permission to mine. Far from it. All that a holder of an exploration licence is entitled to do is carry out ‘prospecting operations’ within the meaning of that term in the Mining Regulation 2003.

16 No evidence is tendered of environmental harm having ever occurred from exploratory drilling of the kind undertaken by the first respondent …”.

47 Fifthly, the first respondent submits that there is no evidence to suggest that if the Court does not make a maximum costs order, the applicant will discontinue the proceedings. The applicant has demonstrated the capacity to access significant funds for legal costs, including from sources external to its members. Mr Duddy has stated that there are 114 members of the applicant, half of whom are owners of land within EL6505. There is no evidence that these members of the applicant do not have the means to fund the applicant’s legal costs.

48 The second respondent made submissions that overlapped to an extent with those of the first respondent. First, the second respondent also submitted that the primary objective of r 42.4 is ensuring that amounts incurred in legal costs are not disproportionate to the amount or issues in dispute.

49 Secondly, the second respondent submits the underlying rationale for the rule in r 42.4 is that “in a particular case the possibility of a potentially ruinous costs order may prove too much of a deterrent for a litigant seeking to vindicate a legitimate claim” (at [5]). The second respondent continues that:

“6 It is in that context that an assertion that a matter involves the resolution of ‘public interest issues’ needs to be considered as a factor only . The rationale for considering whether a case presents a true issue of ‘public interest’ for resolution is that, if it does, then that is a reason for allowing the proceedings to go forward so that the Plaintiffs and other members of the public can derive the benefits that flow from the resolution of that issue (see Woodlands v Permanent Trustee Co Ltd & Ors (1995) 58 FCR 139 at 148). Thus in Woodland the proceedings involved a class action, the resolution of which was potentially beneficial to ‘many thousands of people’ ( id ). Similarly in Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 the determination of the claim of discrimination in that case had the potential to benefit a potentially wide group of air travellers in circumstances where the cost of the proceedings would be disproportionate to any benefit the individual Plaintiffs would derive.”

50 The second respondent submits that the rationale for the rule is not met in the circumstances of this case:

“7 Once the rationale for the rule is understood it follows that this notice of motion should be dismissed. There is no evidence that the proceedings would be inhibited if the order is not made … .

9 A consideration of the evidence presented by the Applicant in support of the proceedings reveals:

(i) There is no suggestion that the proceedings will not proceed or that there is even any reluctance on the part of the Applicant not to proceed if an order capping each party’s costs is not made and an order is made that costs follow the event;

(ii) Nor is there any suggestion that any hardship will be occasioned to any individual if a capping order is not made and an order is made that costs follow the event;

(iii) There is no evidence of any particular financial burden or hardship that might be occasioned to the Applicant should the costs order not be made. In particular, there is no suggestion that it has any specific asset which might be imperilled in the event that a costs order is made; and

(iv) There is no evidence that its members are not capable of providing funding to the Applicant to meet any costs order that may be made against it.”

51 Thirdly, the second respondent submits that the characterisation of the proceedings as being brought in the public interest is only one factor to be considered in the making of a maximum costs order. The second respondent submits:

“It must always be borne in mind that the ultimate rationale for the order concerns access to justice and, for the reasons set out above, that will not be affected if the order is not made.” (at [14])

52 Fourthly, the second respondent submits that the case does not involve the resolution of any public interest issue. The second respondent developed this submission by reference to the two factors stated by the UK Court of Appeal in R (On the Application of Corner House Research) v Secretary of State for Trade and Industry, namely whether “the case is a public interest case raising issues of public importance” and whether “the public interest requires that those issues be resolved”. The second respondent submits that the Court, in the resolution of these proceedings, will not resolve any issue about the public interest said by the applicant to be served by the litigation:

“16 In this case the public interest said by the Applicant to be ‘served by the litigation’ is the ‘protection of the environment of the Liverpool plains’ (Applicant’s submissions at [16]). There is no attempt to identify what are the ‘issues of public importance’ that the ‘public interest’ requires be resolved by the proceedings. The Court will not resolve any ‘issue’ about the ‘protection of the environment of the Liverpool plains’. It is not part of the Court’s function in these proceedings to determine one way or another whether the environment of the Liverpool plains is adequately protected or imperilled or whether any such affectation of the environment is outweighed by the social utility of coal exploration. Instead, the court will determine the validity of the licence based on the various pleaded issues all of which concern the proper construction of the Mining Act 1992 (NSW). Only one of those issues addressed environmental matters (paragraph 17 of the statement of claim) and that only raises an issue as to whether the matters set out in s 237 of the Mining Act were required to be considered by the Minister and, if so, whether they were or not. The determination of the question is not likely to depend upon anything other than standard principles of construction.”

53 The second respondent submits that the proceedings are not one which will resolve novel issues of general importance and some difficulty. The construction of s 237 of the Mining Act which will be tested in these proceedings, will have no enduring utility. This is because the Mining Amendment Act 2008, which was passed by Parliament on 20 May 2008 but has not yet commenced, will repeal s 237. A new s 238 will provide that in making a decision to transfer an exploration licence, the decision maker is required to take into account the environmental matters set out in that section, unless those matters have already been considered or assessed. The second respondent submits that even if the transfer of the licence of the first respondent is found to be invalid, the underlying licence authorising exploration of the area, which has been in existence since 1980, would remain in existence. Exploration could continue under that underlying licence or it could be transferred to another party.

54 Fifthly, the second respondent submits that whilst the application for a maximum costs order might have been made in a timely fashion in these proceedings, nevertheless the licence which the applicant seeks to have declared invalid was transferred to the first respondent over three years ago. The applicant appears to have been aware of that fact since that time. In the intervening period various members of the applicant have brought proceedings in the Mining Warden’s Court, each funded by the applicant, in which the validity of the licence now challenged was assumed. In these circumstances, the second respondent submits that there has been delay.

A maximum costs order should not be made in this case

55 As I have noted above, the power to make a maximum costs order is concerned to ensure access to justice. Access to justice may be promoted by ensuring proportionality of costs in some cases, but that is not the only object of making a maximum costs order. I reject the submissions of the first respondent and second respondent that the only object of r 42.4 of the Uniform Civil Procedure Rules is to ensure proportionality of costs. Rather, I accept the further submission of the second respondent that the underlying rationale of the rule concerns access to justice. Ensuring proportionality of costs is one means of facilitating access to justice and alleviating the potentially stultifying effect on the proceedings if the capping order is not made is another means.

56 It is for this reason that the public interest nature of the litigation can become relevant. Typically, plaintiffs bringing public interest litigation stand to gain no or little financial benefit if the litigation is successful. The possibility of a potentially ruinous costs order may act as a deterrent to a litigant seeking to bring or continue litigation in the public interest. The object of making a maximum costs order is to ensure that access to justice is not impeded in these circumstances.

57 However, a public interest plaintiff is but one kind of plaintiff that is entitled to access to justice and, conversely, ought not be deterred by the possibility of a potentially ruinous costs order.

58 The critical question in determining any application for a maximum costs order is whether access to justice will be promoted or impeded by the making or not making of a maximum costs order. The particular circumstances of the litigation and of the plaintiff are relevant in answering this critical question, but these matters are not ends in themselves.

59 Hence, the applicant’s submission that a maximum costs order should be made merely because of the public interest nature of the proceedings, and the more extreme submission that a maximum costs order should be made whenever proceedings are brought in the public interest, should both be rejected. The public interest nature of the proceedings is a factor to be considered, but it is not dispositive as to the exercise of the power to make a maximum costs order. The consequences for access to justice of the public interest nature of the proceedings and of the plaintiff need to be evaluated in the circumstances of the case.

60 So, in the case of Blue Mountains Conservation Society Inc v Delta Electricity, the Court concluded that access to justice would be impeded if a maximum costs order was not made. The public interest plaintiff would be deterred from continuing the proceedings if a maximum costs order was not made and issues of some public significance would therefore not be able to be heard and determined by the Court. A similar conclusion was reached in Corcoran v Virgin Blue Airlines Pty Ltd.

61 In this case, however, the applicant did not claim that it would not continue with the proceedings if a maximum costs order was not made by the Court. Although the applicant is an incorporated association and its assets are not significant, membership of the applicant comprises some 80% of the landowners affected by the mining licence the subject of challenge in these proceedings. The landowners’ properties are of high agricultural productivity. The landowners’ concern, of course, is that exploration and mining may adversely affect that high agricultural productivity. This means, however, that there is a financial incentive for the landowners to provide financial resources to the applicant to continue with the litigation.

62 In the facts of this case, therefore, I am not able to conclude that access to justice would be impeded by the Court not making a maximum costs order. The applicant will continue with the litigation regardless.

63 This is also not a case where disproportionality of costs has been established. At stake is a mining licence of nearly $100 million in value, which value no doubt reflects the underlying mineral resource potential, as well as agricultural lands the subject of the mining licence, which are of high productivity and value. The issues raised by the judicial review proceedings are of importance to the parties, to the mining industry and the broader community. Although estimates have been provided in evidence that the legal costs to the parties might be around a couple of hundred thousand dollars (the first respondent’s cost estimate was in the range of $192,000-$265,000), it is not established at this stage of the proceedings that such an amount of costs would be disproportionate to the importance and complexity of the subject matter of the proceedings. Disproportionality of costs is, therefore, not a ground in this case for making a maximum costs order.

64 Of course, the Court still has a duty to give effect to the overriding purpose of the just, quick and cheap resolution of the real issues in the proceedings. Discharge of this duty can mean, in certain circumstances, that, notwithstanding the parties’ desires, a maximum costs order should be made in order to give effect to this overriding purpose, by providing a costs cap which will provide an incentive to the parties to keep the costs of litigation in check. However, in the circumstances of this case, I am not satisfied that it is appropriate to make such an order. The proceedings are listed for case management on 28 September 2009 for the purpose of making directions necessary to give effect to the just, quick and cheap progress of the proceedings to hearing and the just, quick and cheap hearing of the proceedings, which is fixed for four days beginning on 26 October 2009. Making directions is a more appropriate means of achieving the overriding purpose than making a maximum costs order at this stage. In addition, the processes of this court in this new jurisdiction have ensured that this matter will come to hearing within little more than three and a half months of the action being commenced.

65 The above reasons are sufficient to support the conclusion that a maximum costs order is not necessary to facilitate access to justice for the applicant. However, I should make a few final remarks. First, the fact that I have not been persuaded to make a maximum costs order at this stage does not mean that, if circumstances change, the Court could not consider making a maximum costs order in the future. Secondly, it has not been necessary to determine the applicant’s submissions that the proceedings are properly to be characterised as being in the public interest or the first and second respondents’ rebuttals. This is because, even if they are, the evidence does not establish that the proceedings would be discontinued if a maximum costs order is not made.

66 Thirdly, the fact that a maximum costs order has not been made, notwithstanding the applicant’s claim that proceedings are brought in the public interest, does not preclude the Court in the future exercising the costs discretion under s 98 of the Civil Procedure Act 2005 so as to decline to make a costs order against the applicant if it were to be unsuccessful in the substantive proceedings, on the basis of the public interest nature of the litigation. The trial judge can consider the nature of litigation, and the consequences for the exercise of the costs discretion, after having heard the evidence and the arguments and having made findings at the hearing. It may be at this stage the public interest nature of the proceedings is established and that it would be a proper exercise of the costs discretion to not order the applicant, if it is unsuccessful in the proceedings, to pay the costs of the respondents or to pay the costs of only one of the respondents. However, that is a matter to be determined later. Nothing that has been decided at this stage excludes proper exercise of the costs discretion in the future.

67 For these reasons, the applicant’s Amended Notice of Motion filed 31 August 2009 is dismissed. The costs of the motion are reserved.